Solana catches fire after SBF loses his empire

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Crypto industry is passing through a phase of turmoil. The markets are in despair and it’s hard to digest the fate of time. One of the largest Centralised Exchange (CEX) by trading volume which handled $627Bn (Year-to-Date), is now a history. Yeah, you guessed it right. I am referring to the FTX exchange here. 

SBF’s empire comprises basically two giant firms: FTX (his exchange) and Alameda Research (his trading firm). However, being separate entities, the balance sheet of Alameda revealed that it had got FTT tokens worth billions.  

As of June 30, Alameda had $14.6 billion worth of assets with “unlocked FTT” being the single biggest asset worth $3.66 billion. The balance sheet also highlighted significant SOL tokens holdings: $292 million of “unlocked SOL,” $863 million of “locked SOL” and $41 million of “SOL collateral. 

Solana Foundation had significant asset exposure and transaction histories linked to bankrupt FTX and Alameda Research. The Solana Foundation and Solana Labs sold 58.08M SOL tokens to Alameda Research and FTX Trading, representing nearly 11% of Solana’s total supply.

On the flip side, Solana Foundation held almost $200m of tokens on crypto exchange the day before it froze withdrawals. It had approximately $1M in cash or cash equivalents, 3.24M common shares in FTX Trading Ltd, 3.43M FTT tokens and ~135M SRM tokens. 

Wrapped assets affected by FTX’s Sollet custodial bridge

Sollet Bitcoin (soBTC), a so-called “wrapped” asset supposedly backed 1-to-1 with Bitcoin, plummeted by $10K on Raydium. FTX only allowed withdrawal for real bitcoin and has got ~16K soBTC at strand. The total exposure to Sollet-based assets is valued at approximately $40 million as of Nov 10, 2022. 

Serum Fork

Serum, an order-book-based DEX and the backbone of DeFi on Solana, has dwindled with the downfall of the SBF empire. Mango Max, an anonymous Solana developer quoted; 

The Serum program update key was not controlled by the SRM DAO, but by a private key connected to FTX” 

As on Nov 8, 2022, TVL on Serum stood at $102.3 Mn and is now just $0.43M as of Nov 18, 2022. FTX also held $2.2 billion in SRM tokens which had got its native SRM token tanked by ~70% and is now trading at $0.25.

FTX crash would haunts VCs for long

The collapse of Sam Bankman Fried’s backed Alameda Research and FTX has overshadowed Mt.Gox in both magnitude and quantum of money lost. 

FTX and FTX US had raised a combined $2.2 billion at a $32 and $8 billion valuation. Sequoia, SoftBank, Tiger Global, Paradigm and others had their investments in FTX while Sequoia and Paradigm had already written down their stakes to zero. The Ontario Teachers’ Pension Plan Board had $95 million invested in FTX.”

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With the downfall of these entities worth billions, it has wide open the loopholes in the operational framework and fund handling process of centralized exchanges. The downfall surely highlights that the custodianship and liquidity are fragmented & non-transparent. This has strengthened the premise that DeFi protocols surely position themselves as a substitute for centralized solutions. 

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